Iowa withdraws proposal to opt out of Affordable Care Act

Washington, UNITED STATES: The US Department of Health and Human Services building is shown in Washington, DC, 21 July 2007. The department, which began operations in 1980, has more than 67,000 employees. AFP PHOTO/Saul LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)

If the Trump administration had approved Iowa's waiver request, it would have been the first to create a state-run alternative to the health exchanges required under the law championed by President Barack Obama.

Insurance premiums in the state marketplaces are based largely on income, but Iowa's proposal would have made age a factor as well. Officials argued that would make the policies more attractive for younger, healthier residents, although some older residents may have been hit with even higher costs.

Iowa Insurance Commissioner Doug Ommen said he learned from U.S. Department of Treasury officials last week that it would be several weeks before they could provide estimates about how much money the state would receive from the federal government to run its program. It decided to withdraw because open enrollment for next year begins in nine days and there wasn't enough time, Ommen said.

Because of high costs, only one company chose to offer coverage in next year in the Iowa exchange — Minnesota-based Medica — but that was only if it could increase rates by 58 percent for its existing customers. Individuals buying insurance from other companies will see even higher rate increases. Those insured by Aetna, for example, will see rates double, Ommen said.

In Iowa about 72,000 individuals including farmers, small business owners and retirees buy their insurance on the individual market. Most others get their insurance through their work or have policies grandfathered in when the Affordable Care Act was created.

Ommen said he expects between 18,000 and 22,000 people to drop insurance under the planned rate increases in Iowa.

"We believe Iowa's stopgap measure was better than Obamacare. It lowered premiums keeping healthy individuals in the market," he said.

Republican Gov. Kim Reynolds, a Trump supporter, denied the federal government was going to deny Iowa's application. She repeatedly expressed her dislike of the health care law, which she blames for destroying the insurance market in Iowa and said Congress needs to fix it.

Reynolds said she will visit Washington Tuesday and meet with Vice President Mike Pence and others to further discuss solutions.